September 23, 2025 • 36 mins
Joe Suttles, a consultant in ag investing, joins hosts Todd Kuethe and Chad Fiechter in this episode of the Purdue Commercial AgCast to discuss his role and insights into private equity investments in agriculture. Suttles outlines his responsibilities in working with fund managers and managing existing investments to solve issues. He shares insight into the complexities of agricultural investments, emphasizing the importance of long-term focus and the intricate nature of managing agricultural production businesses. The conversation touches on the alignment and agency challenges in ag businesses, the role of institutional investors, and the potential future trends in farm management and consolidation.
Check out all our “Purdue Commercial AgCast” podcast episodes: https://purdue.ag/agcast
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Episode Transcript
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(00:06):
This is our conversation series.
Where we're having a series ofconversations to try to understand
how the ag economy works.
The previous conversation with KyleMaple and it wrapped up, he said,
you gotta get Joe Suttles in here.
So, we're today joined by Joe Suttles.
Joe, say hello.
How are we doing?
Okay.
Tell us a little bit about what you do.
I am today a consultant inthe, ag investing world.
(00:29):
I help with companies that are lookingat a private equity type investment
into various, um, whether it's farmlandup through integrated businesses,
even through like retail products,but all ag and ag production focus.
So these are companies or individualsthat are wanting to get exposure
to the agricultural sector.
They see it as an attractive investmentto add to their broader portfolio.
(00:52):
Yeah, in the back of all ofit is institutional investors.
So, you know, pensions,sovereigns, insurance companies,
endowments, foundations.
They have some allocation thatthey want, whether it's, you know,
for diversification, for, youknow, some kind of return profile.
They want some kind ofexposure, this kind of area.
I don't know of any that are greaterthan 10% overall in this area, but
some of these funds are huge and soit can be pretty serious dollars,
(01:15):
and so I wouldn't directly interfacewith most of those institutions.
I would generally help, the manager,the fund manager, the GP, a general
partner in those structures.
So they're the ones that arelooking to make some investment.
And you say, I can help youfigure out which one of these
makes sense and does not.
Yeah, I certainly help withunderwriting, I'm not gonna, show
(01:35):
up and tell somebody, oh, this is anarea that you should go invest in.
It's more, hey, we've gotthis problem, we've got this
investment we need help with, or,
Okay, so you're, you comein like the post right?
Hey, help us manage this, figure this out.
Post meaning after
Post meaning after,
for clarification.
Yeah,
Yeah, yeah.
Not, not as in giant stickthat supports a fence.
Yeah, a lot of times, there's somethingthat, let's say some institution or
(01:58):
group, they bid off some investmentand maybe something went wrong.
Maybe it wasn't fully thought through.
Maybe they hired a manager whenthings didn't go well and now they're
moving on to try something different.
And so those are the kind ofsituations where, I like it,
'cause number one, it's messy.
It's kind of fun.
you're there to try to fix problems.
if things are alreadynot going great, right?
There's, there's less pressure.
You can't screw it up too bad.
That's true.
(02:18):
Ooh, I like it.
Okay.
Wait, so.
There's probably lots of people likeyou for other sectors, like if they're
investing is it primarily just ag theywould be potentially investing in and need
some consultation on these kind of things?
Or are they making other investments too?
(02:38):
Yeah, they'd be making other investmentslike, I'm gonna make up numbers, but let's
say that some pension wanted to allocate.
10% to, the combination of realasset allocations and private equity.
That'd be kinda low in combination.
But those real assets mightbe timber, farmland, it could
be commercial real estate.
On the private equity side itcould be, you name it, right?
Any kind of, any kind ofmanagement combination.
Right.
it could be distressed debt, itcould be all sorts of things.
(03:01):
and so for me, whether it's onasset investments like farmland or
whether it's, integrated companiesin more private equity side, it
would be production ag focused.
Yeah.
There'd similar people if youwere gonna invest in healthcare.
Light manufacturing, something like that.
Yeah.
So if somebody called up and said, Hey,I've got this project, this business,
this investment, and we'd like somehelp with it, but it's more of a,
(03:21):
you know, maybe it's a food business,like a CPG sort of business, but it's
not really ag production focused.
I put my hand up and say, hey, I don't,I don't know that I can help you.
I don't have any experience there.
Okay.
They could go find somebody to do that.
So when we're not podcasting,we're doing other professor stuff.
One of 'em is workingwith students, teaching.
So we also ask like what is yourbackground that kinda led you to this?
(03:42):
So what if I had a student that saidlike, oh, that sounds like a cool job.
Yeah.
And they're like, well,how do you get there?
Yeah.
I probably won't have a great answer foryou, I didn't want to go into the real
world when undergrad ended, and I didn'treally get into the ag econ department
until halfway through my junior year.
Wait, what did you major in before?
I came into Purdue.
I wanted to be a geneticist or something.
I was in the school of science.
Um, I piddled, I piddledaround for a few years.
(04:04):
I ended up taking, BobTaylor's, was it 217?
Like his, his class and I loved it.
That guy was just awesome.
Then I took some other ag econ classes.
I had like, I think I had, JoeBalagtas, Corinne Alexander, Roman
Keeney, all like their first semester.
They would've been fresh off the presses.
Hang on, do you remember BobTaylor's book for 217, I think
(04:24):
it was, Life, Love and Economics.
Do you remember this?
I don't remember that.
No.
it was sort of like guideto living through economics.
Yeah.
But it was, he wrote it.
Yeah.
Yeah, yeah, yeah.
Yeah, but I loved thatit was, anyway, sorry to,
The thing I remember about his classes,I don't even recall a textbook, we
probably had one, but he had you printout a binder full of documents that he
(04:46):
wanted you to read through the semester.
A lot of printing resources
A lot of the old days of the copyshop where you go to the copy shop
and I'm like, I'm in this class.
And they'd be like, here'sthe stack of papers for you.
Good times.
I love AgEcon.
I didn't wanna go into the real world.
I stayed for an MS here.
I think it was my first semesterAlan Gray came to me and he said,
hey, would you like to help me outdo an assistantship after that?
(05:07):
'Cause before that I wasn't on anything.
then I started working with CAB.
Really enjoyed time withhim and Mike Boehlje.
And then during one of theCAB meetings at the Union.
Alan Gray said, hey, Iwant you to meet a guy.
He'll find you.
and so Zarrell Gray, who's the guy Iworked for, for like a dozen years, he,
he found me, went down and had a smoothiein the basement and, and I had a job.
I was fortunate I didn't go look.
It just kind of showed up.
(05:28):
I loved working for him.
Zarrell was an amazing guy to work for,and I was at Teays for, 12, 13 years.
That's a similar sort ofag investment space, right?
It is fully ag production focused.
It's like a permanent vehicle,that invests on behalf of
institutional investors.
A good number of them.
so that's what I did for a long time.
Then I took a break, spend time withkids, and then now I kind of just, do
(05:49):
the same thing hourly at this point.
Alright.
How do people find you?
How do they know?
Let's call Joe.
Uh, Zarrell.
Really?
Yeah, that's pretty, pretty, commonlythat's the connecting thread.
I'll go have coffee with him, tellhim I'm kind of bored, and next
thing you know, there's somebodythat needs help with something.
And, yeah, I've been more thanbusy, more busy than I'd like to be.
So is that just because thatworld of people investing into
(06:11):
production ag is so small.
Zarrell knows everybody.
So it's like, hey, we got a problem here.
And Zarrell's like, hey, Joe's not busy.
Yeah, that seems to be how it goes.
I think in general, if you want tobe a consultant, one of the best
things to do is know somebody who'sgood at what you do and is very busy.
At least that's been my observationof them saying I can't do this.
(06:33):
So, or if they're, or if their expertiseis just slightly a skew of yours.
Right.
So if your specialization was in pickingNCAA tournament brackets, you'd wanna
make best friends with a guy thatruns an NFL pick 'em league, and then
somebody's like, oh, I wanna do, somebrackets and you're like, I don't do
college man, you should talk to Chad.
Right.
That seems to be.
I wanna go back 'cause like I feel likeI meet people who want to be consultants.
(06:56):
And one of the things you didn'tsay is you spent 12 years doing the
job that you do now, and then youleft that place and the person who
hired you is still recommending you.
So you were obviously very good atwhat you did for, because you could
have left that for 12 years andthat cat's like, thank God gone.
Whatever you're call, do
(07:16):
Don't, don't call Joe.
I think there's two parts that I would sayfor the consulting world, if I was giving
students advice, it'd be do somethingfor a while and be really good at it.
That probably will lead to youhaving opportunities afterwards.
Would you say that?
Yeah.
I mean.
Yeah, I'd, I'd like to think I'dworked fairly hard at that job.
Screwed up a lot of things.
that was the biggest benefit I had.
being a good boss, he let me screwstuff up left, right, and center.
(07:37):
From day one, I have no idea whyhe permitted me to do that, but
it led me to have experiencesthat a lot of people don't have.
And that's not true of justme, like everybody at Teays.
That's how it was handled.
That's cool.
There's a general shortage, ofpeople with experience in this area.
Over the last 15 years, a lot of capitalhas been allocated to ag production
space and farmland in particular.
When you're trying to put hundredsof millions of dollars to work, you
(07:58):
know, and billions in aggregate andtrying to find people with that kind
of experience, like you're gonna havea shortage with that kind of growth.
It's been a pretty incredibleamount of allocations.
I think the challenge in workingwith students and knowing, I mean,
I've known Joe and I were in schooltogether, so we go back a long ways.
I don't think I've had a conversationwith Joe that he hasn't said.
Do you know anybody thatwould want to do this?
They're always looking for people thatare willing to work hard, that are smart.
(08:21):
Know about the ag sector.
Or know about investing andyou'll teach one or the other.
It seems like, it seems to, is sortof the sector in general, right?
Like people either come from investments,institutional investing side and learn
about agriculture or they come from theag sector and learn about investing side.
Yeah, I think that's right and it's veryhard to find folks that have experience,
(08:42):
in ag production, have an interestin staying in ag production, but also
really have an interest in finance.
Right?
'cause if they go to school andwant to be on Wall Street, that's
the direction they're gonna head.
I think there's a lot of people thatwant to go into ag production, but
they would love to talk to you aboutchemical rates or, weed emergence.
They don't wanna talk to you about balancesheets and present value and cash flows.
That's the issue we have as professorsoften with students when people are
(09:05):
really interested in ag sector andthey're like, oh, I'd love to work in ag.
And it's like, they would almost ratherbe a sprayer than be an accountant.
Two extremes.
Which I get right.
That can be a pretty satisfying job.
I assume you've also workedacross a variety of commodities
and a variety of locations.
Yeah.
I think there's a lot of times peopleinterested in agriculture are interested
in the commodity that they grew up.
(09:26):
Yeah.
My family grew up growing hogsand so I wanna work in hogs.
Right.
and it's like, whoa, there's this greatopportunity to do like, be like for
work at a wheat farm and like dakotasand they're like, I'm not doing that.
I'm staying here in mycounty doing this thing.
So touch on a little bit on the varietyof ag companies or subsets of the
ag sector that you've had to learnabout through the course of your job.
(09:47):
Every, I guess just to make a list, right?
Chip potato production, carrot, organicveg production, organic milk production,
seed corn, seed soybeans, and otherseed production, row crop commodity
businesses, both those integrated into,for example, the dairies where I used
to work, and also on its own, right.
You know, it's a standalone businessand different kinds of partnerships.
(10:10):
Today I'm involved with a pistachioranch, a coffee farm in Hawaii, hog
business, which to your point, I grewup on a hog farm and I never touched
hog until basically a year ago.
I was really excited to be part of it.
And that's an amazing partnership.
And then, continuing to look atadditional deals, whether it be, you
know, there's a lot of distress rightnow, particularly in California, both
because of water and labor, and generalcommodity prices for especially tree
(10:32):
nuts and grapes, both wine and table.
And so, looking at differentkinds of deals and opportunities
there for one of the clients.
The other thing that went likeas professors that we often
deal with is the students thatare not from the ag background.
Their exposure to agricultureis driving to campus.
Right.
And they're just like, yeah.
I'm just like, I don't, we just wannawork with like corn and soybeans forever.
I'm like, no.
There's a whole variety of things.
(10:53):
Yeah.
so here's a question for you.
Mm-hmm.
If you're looking for someone who wouldbe good in production ag, you've hired
people to do roles in these farms, right?
Yeah.
How worried are you about their specificproduction knowledge versus their
experience in some production system?
(11:15):
If you got a really sharp corn andsoybean kid from just north of town here.
Are you thinking, hey, if we need someoneto come into the coffee farm, there's
transferable skills or is it pretty,
I guess it depends on the jobthey're being asked to do.
For example, a guy that that worksfor a another chip potato company
(11:35):
that I don't have anything to do with.
He had virtually zero agbackground, but he was in the Army
and was used to managing people.
His role is managing a team of peopleacross a multi-state, production system.
That's his skillset that matters.
He kind of grew up on a farm.
He didn't go to business school.
He didn't go to college, buthe developed a real skillset
of managing people in the Army.
(11:55):
And that's translated really wellto him playing a very important role
with a very large, potato company.
That's cool.
For me, every time I go to Todd andsay, please find, you know what student.
I don't have any advice.
Like, hey, do you have anybody, I don'task for somebody who grew up in some major
production system, or, the son of some,
Joe has never said, getme a chip potato guy.
Yeah.
Find somebody with a brain with goodjudgment that works their ass off.
(12:16):
Mm
So, the other thing wedo is economic research.
We build models of the ag economy.
But the first thing we always want is whatdo you actually do in terms of your tasks?
What is a day at your job?
What are the tasks?
The tasks?
I spend a lot of time talking withthe managers of these companies.
Making sure they've got what theyneed, making sure they're on task,
(12:40):
accomplishing whatever initiativeshave been set out for them, giving
them the right kind of support.
Another important job, which anybodythat I work for, I'm sure doesn't like,
but its reality is kind of controllingthe chaos that comes from the ultimate,
interested parties in what's going on.
As you get further away fromdecisions that matter on, on those,
in those businesses, right, you'regonna get these shifts in the winds
(13:02):
that can cause major problems.
It's a job that I fail at continuously.
But you strive to.
keep the messages clear, make sure thatwe're all rowing the same direction.
Make sure we're all synced up.
Make sure that message is getting downto the team and not causing people
to go, what do these people want?
Or feel like, they're on anisland, rowing against the current.
And one of 'em literally is onan island, as you mentioned.
(13:22):
Can you give an example, like maybe evenhypothetical of what you mean by that?
I would say it's, it wouldbe like, imagine this.
So like there's aninstitutional group, right?
That has some ultimate decision makers.
It starts with allocations, right?
And then it goes to some subgroup that'sgonna make specific decisions and approve
or not approve of different deals andmoney that they're gonna allocate to it.
And they're gonna get tothose decisions today.
(13:43):
And then you're gonna get, youknow, a a, a sponsor that's gonna
give a commitment to, to go andput money to work in this area.
Two years later, somebody withinfluence changes their mind.
They read an article in the WallStreet Journal and decided this isn't
somewhere we should be invested in.
Well, that's not how production ag works.
These things take years anddecades, to build things of value.
That was always the philosophy ofTeays, to be, long-term focused.
(14:05):
you're trying to build theseunique businesses because of the
scale of capital available andthe ability to stay on that path.
That's not to say you just put theblinders on and don't adjust, but if
you adjust, it needs to be deliberate.
It can't be chaotic.
so that's not a very specific example,but that's kind of the crux of it, right?
So it would be like somebody allocatingthe capital tries some kind of new
(14:25):
apple and they're like, we're in apples.
We should switch to this variety'cause this is delicious.
And then they say Hey, we wanna switchall of our apples to this variety today.
That would be a very, like in the weedsexample where you're just like, ugh.
And you're like, oh man, we can'tjust get all new trees today.
We can't have thousands of theseapples for you by September.
How much of the role would beyou talking, in this case, the
(14:48):
hypothetical person who just had ahoney crisp apple for the first time?
Versus you being the farm manager's,just been told by somebody that they
need to replace all the trees and you'relike, hang on, just take a minute.
Let me go have a conversation.
How does that normally work?
I would say my time is like 6040 between talking, down toward
the businesses themselves andthe managers of those businesses.
(15:10):
And then 40% back up.
And that's communication flow back up.
Let's make sure everybodyknows what's going on.
Nobody gets surprised.
If some new idea comes, I don't want tobe a funnel, but like, hey, let's make
sure we talk about it before that makesits way down to chaos at the ground level.
Where there's some CEO of somebusiness who's got dozens or hundreds
of people working for him or her,and all of a sudden he's got some new
(15:31):
mandate and it's like, wait a minute.
Three weeks ago we were doing this and wecan't just turn this big shift, overnight.
Sounds like we could use Joesometimes at the University, to be
like, hey, here's what we're doing.
Right?
Yeah.
We need more those roles.
Probably everybody's listening.
Is that why it works reallywell for you to be a consultant?
Because you're not directly in the system.
(15:55):
It's been something that I'vepersonally enjoyed In these last
couple years because it allows meto say, Hey, I'm an outsider here.
I don't have a dog in the fight.
But I recommend you don't do this.
And I sleep better knowing thatif they still do X, at least I did
my best and it wasn't ultimatelyon me to make that decision.
But yeah, it's easy to losesleep over things that impact
people's lives and jobs.
Right?
Something that you don't, agree with.
(16:16):
It sucks if I can't make somethinghappen the way I wanted it to, but
there's plenty of times that I gotmy way and we did things I wanted
to and it was a dumb decision.
That's true as well.
I think farm, I'm gonnacall 'em farm folks.
Okay.
I like that.
I'm putting myself in that group.
We like to think, Wall Streetcould never possibly understand
the nuance of what we're doing.
Hmm.
(16:36):
Can you talk to that at all?
Do you think that these institutionalinvestors are a little more savvy than
people would like to give 'em credit for?
Understanding sort of theopportunity and the challenges of
being in production agriculture?
I doubt they're more savvythan they get credit for.
I'm using that very broadly.
There's an attitude I've run intoplenty of times of it's farming.
How hard can this be?
(16:56):
The reality is it's more complicated.
Most of these businesses aremore complicated than any
other type of manufacturer.
Like if you think aboutmanufacturing plant, right?
Like it's in a, it's all inside.
It's a controlled environment.
Manufacturing, like food manufacturing isan important part of these supply chains
But when you're ultimately residing on asupply chain that is subject to weather,
season, geography and logistics majormovement of serious volumes of product.
(17:18):
it's a whole nother animal.
And the amount of science that goesinto, growing even the most simple
like corn and soybeans, right?
It seems so simple.
You plant it, you combineit, you fertilize.
It's incredibly complicated.
And what goes into those chainsall the way through that system?
I think it's.
as complicated as it gets.
That brings to the next question,
That's a beautifulanswer for our audience.
(17:38):
which is, that we always think about.
So you have things that you're doing.
What are the constraints, what limitsor could potentially be limits for,
the ability for these businesses you'reworking with, to hit their objectives?
To be more general and to speakto where I would be involved, I
would say those constraints arealignment and agency problems.
Synced up decision making.
(17:59):
Those are the hard things to do.
Those are the more high levelthings to think about, but in
reality, a lot of businesses fail.
Even if they are in an area thatthey should have been successful.
A lot of times it has to do withpartners or management that just
aren't aligned with what they'retrying to get done, where you don't
have people all rowing the samedirection to achieve what they should.
Things start to break down.
(18:19):
if you've got a management team thatfeels like ownership doesn't have their
interest in mind, all of a sudden,they're not working To accomplish the
goals you wanna have accomplished.
In microeconomics we generally callthat principle agent problems, right?
And those come because ofasymmetries of information.
So like, somebody knows a bunch andsomebody doesn't know as much, or there
are things that are not observable, right?
(18:41):
If you're investing in a businessthat's somewhere else geographically,
you can't necessarily observe isthis person actually doing the
things that they're telling me?
Mm-hmm.
Right?
It's tricky for production agriculture.
You can do all of the right practicesand then something outside of your
control prevents you from realizingthat potential like weather or
a bunch of people quit on you.
That's often a problem in general, acrossthe economy, are these principal agent
(19:03):
problems with what is actually observable?
And then are there asymmetries in termsof objective functions or knowledge base.
And production ag, I think, is evenmore complicated in that way, right?
'Cause the feedbackloops are more difficult.
Information flow can be more difficult.
You're in the middle of nowhere, ona large potato farm, and the ultimate
owners, the ultimate economic interestin that deal aren't gonna see it
(19:26):
or touch it or feel it very often.
They don't really know what's going on.
let's say you have a bad year in ag, yougotta wait another year for feedback.
Was it really the weather?
Or do you not know what you're doing?
You get these questions anddecision making where, somebody
just throws in the towel.
And it's like, no, no, no, no.
You know, not yet I know itwas a bad year, but these guys
really know what they're doing.
And that's hard.
You gotta really trust people.
You gotta build systems where,folks are aligned to you.
(19:50):
Do you think, in January Iwent down to Florida and it
was the Aliko orange groves.
I've heard of it.
So they announced that theywere shutting 'em down.
They were gonna do some development.
It's crazy.
Like 50,000 acres of juice oranges,like big, you know, big deal.
And so we're driving in and I was ina bus with a bunch of farmers and it
was kind of the, overheard a coupleconversations where it's kinda like,
(20:12):
oh, this is a corporate run farm.
You can tell it by like theintentionality, like the
grasses in mow blah blah,
Mm-hmm.
Do you see that difference betweenfamily run where someone's pouring
their heart and soul into making sureeverything looks perfect versus these
corporate where an investor fromsomewhere else who's owning the operation?
Yeah, I would say all else equal.
(20:33):
If you took the best of the best, familyoperations and compared them to your
average institutionally owned operation,they're gonna run smoother, right?
When you've got that like leader that,or, or maybe a series of in a family
of, of leaders that, you know, there'sthat continuity That certainly matters.
I don't think it's crazy, theloyalty to, that family or
(20:53):
that individual they work for.
But institutional capital playsan important role as well.
For example, one of those familieshas been wildly successful and done
incredibly well, and now this business isso large that they have a huge problem.
How do I maintain that kind of wealth thatI've created for my family and not destroy
this incredible business that we'vebuilt and this legacy we wanna maintain?
(21:16):
You can find plenty of investorsthat'll show up and give you
a bid with zero promises.
Or they show up with, hey, we've got ourplaybook of how we chop these things up.
Or we bring efficiencies to thesebusinesses and they pay, you know, a
bunch of consultants to give 'em ideason what they should do and whatever else.
And, and that rarely goes well.
Continuity to the extent institutionalcapital can bring that solution in
(21:37):
those kinds of cases and maintainthis amazing business that's
already been built under that model.
I think that's why it's done that way.
So speaking of these institutionalmanaged farms, one of the things
when we, do extension events stuff,there's, there's a belief among a lot
of people that like there's be a worldin the future where that's basically
all there is with the ag sector.
What do you think about, do you thinkit'll continue to grow or have you seen a
(22:01):
steady state you mentioned before, laborin terms of qualified people that work
in the space is kind of binding, right?
That'd be one way to limit the growth.
That's just been kind of a symptomof this incredible growth over the
last, 15 years of institutionalmoney coming into the space.
Do I think farms using that term looselyare gonna continue to consolidate?
Yeah, I think there's a lot ofdrivers toward economies of scale
(22:24):
that aren't going away anytime soon.
Everybody wants to talk aboutAI these days and all these
things that it'll be able to do.
I don't know, I don't have an opinion, butit's hard for me to see how that reduces.
Or the extent it has any impact.
It seems to me that that's one additionaldriver of economies of scale, the ability
to manage larger and larger, platforms.
So yeah, it's hard for me tosee those drivers going away.
(22:44):
So do you think you will retire froman ag sector that's very different
than you started your career in?
Or do you think it'll be roughly similar?
If you had a crystal ball?
I would say roughly similar, butjust continue to consolidate.
Do you think that, there's been thesestories that Wall Street has a desire to
interact with production ag, find someway to gain exposure to production ag.
(23:07):
Do you think there's potential that someof these family farms could try to work
with institutional capital as partners?
do you think there's opportunity forthat, even like Midwestern farms?
Yeah.
I mean, it's difficult ona, corn bean sort of farm.
it doesn't have that kind ofsexiness that a lot of more
(23:29):
integrated type businesses can.
But, I think you see morevalue add approaches for a
lot of different companies.
it's hard for, your typicalfamily business, even a
large scale family business.
Like, let's make up a number.
So you had 25,000 acre cornand soybean farm in Indiana.
You know, that's difficult, right?
To have a real partner in thedecision making on that farm.
(23:49):
But I think a lot of 'em havebeen very successful courting,
land focused investment groups.
And leveraging that capitalto grow their operation.
Just like any business or any corn andbean business, that's leasing a higher
proportion of their land, there's risk tothat, like off balance sheet financing.
But can they leverage thosecapital relationships and, and
focus on farming and not have tobe plowing, as much dollars into
(24:13):
the land itself in order to grow.
I think there's been a lot ofthat that's gone on, with a lot of
success it works the other way too.
In my opinion, a lot of the mostsuccessful like farmland and you
know, focused funds, they've justidentified incredible operators and
they've said, we'll invest behind you.
Here's our parameters.
You're our guy in this region.
Let's go grow together.
(24:33):
Now you've got alignment.
Right?
These guys want
Specifically on land,
That's land in that
I think that's a modelthat's worked for a lot
I just think it's interesting'cause I think your point of some
of these are growing so large thatit does become really difficult.
Even from understanding,the finance part of it.
Like you've got a lot of exposure.
So being able to diversify ifsomebody else who's investing in the
business would be sweet but thank you.
(24:54):
But yeah.
in that 25,000 acre, corn and soybeanfarmer, like back to constraints and
what you're solving for, like managingpeople and the equipment fleet and
logistics of that kind of operation.
I don't know that there's a need for acapital investor it's not that kind of
scale where that's logical and you don'twanna muddy up that decision making.
When you get into more integratedbusinesses that need to spend 50,
(25:15):
a hundred million dollars on somemajor plant and expansion those
become major capital problemsthat you're trying to solve.
For your corn and bean farmer in Indiana,the capital need is the land, ownership.
I think that's the constraint.
Other businesses that are moreintegrated have bigger capital
needs through that chain.
I think, you know, then there'slogic in those kind of partners.
(25:36):
Because if you're gonna find somebodythat's gonna write those kind of
checks, they wanna say and what'shappening to, to their money.
They don't want a lease, likefarmland, you can find alignment there.
So, so it sounds like there's, uh,the, what I would say, it sounds like
the, the areas that are most ripe forcontinued maturation or growth in these
kind of spaces would be things thatwould be not just a commodity producer.
(25:57):
Not something where you just takeit to the elevator and sell it.
But would be things that you're gonnawanna see through the supply chain
either directly to the consumer in afood product or maybe in a industrial
product or something, but something thatyou are producing that's a little bit
more specialized that has that sort ofsupply chain interactions throughout.
Yeah.
Especially when you go so far thatthose supply chains touch customers
(26:21):
that need long-term security inan inherently risky business.
As soon as there's that pull from theother end of that system for consistency.
For certainty through time.
I think that becomes a major driverof the need for that capital and
the need for that permanence inthose sorts of relationships.
I was gonna sell french fries globally,I'd want to get all the way down to
(26:43):
the potatoes in the ground figuredout from that company's perspective.
Yeah.
In the case of, fry potatoes.
Most of that's still done, the levelof integration there is like grower
agreements, the same with FritoLayand other chip potato companies.
They're still solving for that.
I might get a call from a customerthat says, hey, over the next three
years I need you to be doing 5,000acres in this region because I have
(27:07):
a couple of retiring producers.
And need replacement.
And it's been great working with you.
When you have that kind of pull froma customer, the checks that need
to be written to go out and executeon that, get bigger and bigger.
So you're buying tickets on afull plane, essentially, right?
Yeah.
Trying to buy a seat on a planethat is already booked up.
When you're thinking about a productionbusiness, a lot of times with farm
management, we talk about benchmarks and Ithink the benchmark discussion is around,
(27:31):
did I pay more for seed than my neighbor?
What you are talking about is a level ofwhat's the return to these businesses,
regardless of if it's a dairy farm,a carrot farm, a potato farm, we're
literally evaluating these businesseson the potential to money, not how are
they relative to other potato farms.
(27:52):
Mm-hmm.
Well, ultimately you'recompeting with your neighbors
using that term pretty broadly.
Those key indicators,KPIs, certainly matter.
If you're in a corn and bean business,like what's your cost production, right?
That's what matters over the long term.
And it's not just against yourimmediate neighbor, it's against
whoever you're competing with globally.
Can you compete, can you make money atthis kind of long-term price of corn?
(28:16):
For livestock businesses, nowyou're talking about, how many
pigs you're weaning per, year.
How many pounds of milk percow, per day or per year.
And what kind of cost does it takefor you to maintain that herd?
What are your parameters arounddisease incidents and how's that
impacting your production through time?
These investment managers thatyou interact with, they're closer
(28:38):
to what Chad is saying, right?
Which is sort of saying, look, we wantto hit this sort of return target, and
I don't care if it's carrots or cows.
I want that return target.
Yeah.
It, it certainly starts with their goals.
They're gonna start buying, almondfarms, or they're gonna go Greenfield,
you know, new, new almond ranches.
They have some expectation in mind,but ultimately they're gonna be
(28:59):
looking at how is this farm doingrelative to its neighbors, these
benchmarking approaches to try tosay, are these the right guys or not?
Maybe I was, brilliant that now'sthe time, let's go buy a bunch
of land and develop almonds.
'Cause you know, we're at the lowestsome cycle or whatever the idea is.
But then if you signed up with, whoever'srunning that for you, whether that's
an outside, farm manager, whether it'syour own team that you're building.
(29:21):
If they're not performing well, then yougot halfway there, but now you're flailing
'cause you don't have the right team.
Okay.
How much of it is driven by theserelationships when you have an
established farm, there's a customerwho's working with you, and they're
like, you've made our life a lot easier.
Can you make our life even easierby growing another 5,000 acres?
Like how, frequently do yousee that kind of thing happen?
(29:46):
Yeah, a fair bit, especiallyin pretty consolidated, areas.
Chip potatoes is an easy oneto pick on 'cause it is so
consolidated at the customer level.
FritoLay is the biggest player by far.
When they need to solve a problem,it's always a big problem.
When you're doing things at that scale.
You've seen it with their supply base,like consolidation, consolidation.
It can go too far.
They can get uncomfortable withtoo much exposure to one grower.
(30:08):
But when they have those relationshipsand they have that trust and there's kind
of this history of execution, you know?
It wouldn't be surprising that they losesome grower in some part of the country.
In a company like FritoLay,they're so spread out, right?
The logistics of chip potatoesthose plants are everywhere.
They're produced closeto population centers.
They need potatoes grown close tothose plants and population centers.
Unlike the fry potato business,that's pretty concentrated in the
(30:30):
Northwest, here in the States.
Frito calls and says, Hey, I need 2000acres in the southeast, they're not just,
putting out a request for proposals.
They're going to those suppliersand saying, can you help me?
Can you help me?
It's a ton of risk.
A ton of work.
Ton of just logistics and everythingon top of it to try to execute on that.
I never thought about how much our potatochip system is similar to electricity.
(30:54):
Right, it's like the electric grid.
You can produce all theelectricity you want in Manitoba.
But if there aren'tpeople there to use it.
I dunno, it's fascinating.
Now, I'm gonna my daythinking about chips all day.
So I teach this farm management class.
And I think I've struggled a littlebit on communicating why we have a
specifically farm management classas opposed to business management.
(31:21):
You seem to have some insights into why wewould have a farm management class versus
a general business management class.
So I'm asking you can you help me?
I would go back to, I mean, I'mbiased, number one, to agree with
you, like, yeah, of course farmmanagement is special and different
than general business management.
But yeah, I think it relies there's such abreadth required to run a successful farm.
(31:44):
You've got to understand aton of scientific principles.
You've got to deal with allsorts of suppliers and vendors
to support that business.
You've got to understandincredible complexity to truly
understand your cost of production.
Depending on what kind of businessyou're in, you know, you've gotta
deal with customer relationships.
That can be everything from yourintegrated contract environment to
(32:05):
an open commodity sale process, andyou've gotta be able to manage that.
I mean, there's classes here atPurdue, at least there used to be
about just marketing commodities.
There's a whole lot of businesses thatyou could be managing, If you're out,
managing the local Home Depot, you don'tneed to understand anything about hedging.
You don't need to understand longand short contracts or long and short
puts, In addition, you've got allof the government policy influence
(32:26):
in farms and that's incrediblycomplex and difficult to navigate.
That has to be managed, right?
And you have to play that gamein order to be successful.
Whether it be insurance products, paymentsystems or NRCS, related conservation
programs, it's really complex.
Well, and then we have the otherside of that too, which is all of the
ways that you face regulation, right?
mm-hmm.
(32:46):
Yeah, yeah.
Things coming onto your farms,things going off of your farm,
how people and things aretreated when they're on the farm.
It's incredibly complex.
So Chad, this is why we wantyou to keep teaching that class.
Yeah.
That's a good answer.
Thank you.
Yeah.
Are we close to the wrap up point?
I think we are.
As the longtime listeners to allof the many, many episodes we've
(33:07):
recorded at this point know I towrap it up with a lightning round.
So this is for the people on thetreadmill, given that last push to get
through, or the people out working andthey're just like, I'm falling asleep.
I wanna really, so the key iswith the lightning round as these
are, you have to answer quickly.
The first one I'll ask you is, if youhad a magic wand that you could only
(33:27):
use for work to be able to observesomething you can't currently observe,
what would you do with that magic wand?
What would you want to be able to see?
I suppose I would, I would wanna seewhat the folks on the ground actually
think, like, have full transparencyhow they really feel about the
relationships with, owners or thepartnerships they're interacting with.
(33:50):
Because you spend so much of your time,you spend a ton of time dedicated to
people to really understand, they'regonna tell you what you want to
hear sometimes, and I'd rather hearthe stuff they're really thinking
that maybe isn't as pleasant.
Okay.
The last time that you've had troublesleeping because you were preoccupied
about something you're thinking aboutwith work, what were you thinking about?
(34:10):
You don't have to get too specific.
It would've been fairly recently, afew months ago, it would've been about
a business with some struggles thatwere kind of a sudden, realization and,
frustration to not have seen it sooner.
Caught off guard.
Irritation at myself for not having madeharder decisions sooner, which may have,
avoided some exacerbation of the issues.
(34:30):
If I lose sleep, it's usually becauseit becomes clear that some decision that
should have been made that maybe beenthinking about for a while and like all
of a sudden it led to a bigger problem.
Okay.
If you were issued at work a timemachine you could only use for
professional purposes, when would you go?
When would I go?
(34:52):
Am I like staying therepermanently when I go there?
No.
You're just gonna govisit that time period.
It's a time machine.
It works both ways.
Can I go back to myselfand give myself advice?
You can do whatever you want.
That's what I would, youhave to use it for work.
You can't be like, I'm gonnago see, Guns N Roses, 1987.
You have to use it for work.
I would go back to the day I leftPurdue and went to my first job
(35:12):
and I just have a list of advice.
Do this, do this.
You know, that was dumb.
those kinds of things.
Yeah.
I'd have a long list.
I also feel like you kind of putJoe in a box because you said
you can't go back to Guns N Rosesconcert, but should he be related to
If a work related reason,
If you can write that off, ifyou can get it through corporate,
(35:33):
Well, there's people who do.
Yeah.
No, I know.
You have to
I just felt bad 'cause I felt likeTodd kind of put you in a box.
If you did want to go
He gave me a time machineand then he restricted me.
Exactly.
It's a work issue time machine.
This is like,
You've left out an entire group of peoplerelated to Guns N Roses as an industry.
For Joe, that's not Joe's industry.
But I don't want to take that away from
If Izzy Stradlin wants to come on thepod, talk about Izzy Stradlin does,
(35:56):
then he can it to go back to old Guns
To be clear, I don't wantto go to an old Guns N Roses
Okay.
I didn't think Joe I just thought, no.
Is it weird that was the first
I was concerned that the listenersmaybe thought we took that away.
Yeah, I should have said something smartlike the signing of the Declaration
of Independence or something, right?
But no, Guns and Roseswas the first thing.
Anyway, feel like we'vecovered the ag economy.
(36:17):
Thank you for listening.
Make sure to join us for futureconversations where we learn about the
ag economy, Guns N Roses, chip potatoes,
Fried potatoes.
What else have we covered here?
I think we can, we can wrap it up there.
Uh, so thank you for joining us.
If you think we could learn fromyou and you happen to be coming
through Purdue, let us know.
Uh, 'cause we would love to learn more.
(36:39):
Make sure to subscribe, tell your friends,and come back next month and we'll have
another conversation for you to enjoy.
This is our conversation series.
Where we're having a series ofconversations to try to understand
how the ag economy works.
The previous conversation with KyleMaple and it wrapped up, he said,
you gotta get Joe Suttles in here.
So, we're today joined by Joe Suttles.
Joe, say hello.
How are we doing?
Okay.
Tell us a little bit about what you do.
I am today a consultant inthe, ag investing world.
(00:29):
I help with companies that are lookingat a private equity type investment
into various, um, whether it's farmlandup through integrated businesses,
even through like retail products,but all ag and ag production focus.
So these are companies or individualsthat are wanting to get exposure
to the agricultural sector.
They see it as an attractive investmentto add to their broader portfolio.
(00:52):
Yeah, in the back of all ofit is institutional investors.
So, you know, pensions,sovereigns, insurance companies,
endowments, foundations.
They have some allocation thatthey want, whether it's, you know,
for diversification, for, youknow, some kind of return profile.
They want some kind ofexposure, this kind of area.
I don't know of any that are greaterthan 10% overall in this area, but
some of these funds are huge and soit can be pretty serious dollars,
(01:15):
and so I wouldn't directly interfacewith most of those institutions.
I would generally help, the manager,the fund manager, the GP, a general
partner in those structures.
So they're the ones that arelooking to make some investment.
And you say, I can help youfigure out which one of these
makes sense and does not.
Yeah, I certainly help withunderwriting, I'm not gonna, show
(01:35):
up and tell somebody, oh, this is anarea that you should go invest in.
It's more, hey, we've gotthis problem, we've got this
investment we need help with, or,
Okay, so you're, you comein like the post right?
Hey, help us manage this, figure this out.
Post meaning after
Post meaning after,
for clarification.
Yeah,
Yeah, yeah.
Not, not as in giant stickthat supports a fence.
Yeah, a lot of times, there's somethingthat, let's say some institution or
(01:58):
group, they bid off some investmentand maybe something went wrong.
Maybe it wasn't fully thought through.
Maybe they hired a manager whenthings didn't go well and now they're
moving on to try something different.
And so those are the kind ofsituations where, I like it,
'cause number one, it's messy.
It's kind of fun.
you're there to try to fix problems.
if things are alreadynot going great, right?
There's, there's less pressure.
You can't screw it up too bad.
That's true.
(02:18):
Ooh, I like it.
Okay.
Wait, so.
There's probably lots of people likeyou for other sectors, like if they're
investing is it primarily just ag theywould be potentially investing in and need
some consultation on these kind of things?
Or are they making other investments too?
(02:38):
Yeah, they'd be making other investmentslike, I'm gonna make up numbers, but let's
say that some pension wanted to allocate.
10% to, the combination of realasset allocations and private equity.
That'd be kinda low in combination.
But those real assets mightbe timber, farmland, it could
be commercial real estate.
On the private equity side itcould be, you name it, right?
Any kind of, any kind ofmanagement combination.
Right.
it could be distressed debt, itcould be all sorts of things.
(03:01):
and so for me, whether it's onasset investments like farmland or
whether it's, integrated companiesin more private equity side, it
would be production ag focused.
Yeah.
There'd similar people if youwere gonna invest in healthcare.
Light manufacturing, something like that.
Yeah.
So if somebody called up and said, Hey,I've got this project, this business,
this investment, and we'd like somehelp with it, but it's more of a,
(03:21):
you know, maybe it's a food business,like a CPG sort of business, but it's
not really ag production focused.
I put my hand up and say, hey, I don't,I don't know that I can help you.
I don't have any experience there.
Okay.
They could go find somebody to do that.
So when we're not podcasting,we're doing other professor stuff.
One of 'em is workingwith students, teaching.
So we also ask like what is yourbackground that kinda led you to this?
(03:42):
So what if I had a student that saidlike, oh, that sounds like a cool job.
Yeah.
And they're like, well,how do you get there?
Yeah.
I probably won't have a great answer foryou, I didn't want to go into the real
world when undergrad ended, and I didn'treally get into the ag econ department
until halfway through my junior year.
Wait, what did you major in before?
I came into Purdue.
I wanted to be a geneticist or something.
I was in the school of science.
Um, I piddled, I piddledaround for a few years.
(04:04):
I ended up taking, BobTaylor's, was it 217?
Like his, his class and I loved it.
That guy was just awesome.
Then I took some other ag econ classes.
I had like, I think I had, JoeBalagtas, Corinne Alexander, Roman
Keeney, all like their first semester.
They would've been fresh off the presses.
Hang on, do you remember BobTaylor's book for 217, I think
(04:24):
it was, Life, Love and Economics.
Do you remember this?
I don't remember that.
No.
it was sort of like guideto living through economics.
Yeah.
But it was, he wrote it.
Yeah.
Yeah, yeah, yeah.
Yeah, but I loved thatit was, anyway, sorry to,
The thing I remember about his classes,I don't even recall a textbook, we
probably had one, but he had you printout a binder full of documents that he
(04:46):
wanted you to read through the semester.
A lot of printing resources
A lot of the old days of the copyshop where you go to the copy shop
and I'm like, I'm in this class.
And they'd be like, here'sthe stack of papers for you.
Good times.
I love AgEcon.
I didn't wanna go into the real world.
I stayed for an MS here.
I think it was my first semesterAlan Gray came to me and he said,
hey, would you like to help me outdo an assistantship after that?
(05:07):
'Cause before that I wasn't on anything.
then I started working with CAB.
Really enjoyed time withhim and Mike Boehlje.
And then during one of theCAB meetings at the Union.
Alan Gray said, hey, Iwant you to meet a guy.
He'll find you.
and so Zarrell Gray, who's the guy Iworked for, for like a dozen years, he,
he found me, went down and had a smoothiein the basement and, and I had a job.
I was fortunate I didn't go look.
It just kind of showed up.
(05:28):
I loved working for him.
Zarrell was an amazing guy to work for,and I was at Teays for, 12, 13 years.
That's a similar sort ofag investment space, right?
It is fully ag production focused.
It's like a permanent vehicle,that invests on behalf of
institutional investors.
A good number of them.
so that's what I did for a long time.
Then I took a break, spend time withkids, and then now I kind of just, do
(05:49):
the same thing hourly at this point.
Alright.
How do people find you?
How do they know?
Let's call Joe.
Uh, Zarrell.
Really?
Yeah, that's pretty, pretty, commonlythat's the connecting thread.
I'll go have coffee with him, tellhim I'm kind of bored, and next
thing you know, there's somebodythat needs help with something.
And, yeah, I've been more thanbusy, more busy than I'd like to be.
So is that just because thatworld of people investing into
(06:11):
production ag is so small.
Zarrell knows everybody.
So it's like, hey, we got a problem here.
And Zarrell's like, hey, Joe's not busy.
Yeah, that seems to be how it goes.
I think in general, if you want tobe a consultant, one of the best
things to do is know somebody who'sgood at what you do and is very busy.
At least that's been my observationof them saying I can't do this.
(06:33):
So, or if they're, or if their expertiseis just slightly a skew of yours.
Right.
So if your specialization was in pickingNCAA tournament brackets, you'd wanna
make best friends with a guy thatruns an NFL pick 'em league, and then
somebody's like, oh, I wanna do, somebrackets and you're like, I don't do
college man, you should talk to Chad.
Right.
That seems to be.
I wanna go back 'cause like I feel likeI meet people who want to be consultants.
(06:56):
And one of the things you didn'tsay is you spent 12 years doing the
job that you do now, and then youleft that place and the person who
hired you is still recommending you.
So you were obviously very good atwhat you did for, because you could
have left that for 12 years andthat cat's like, thank God gone.
Whatever you're call, do
(07:16):
Don't, don't call Joe.
I think there's two parts that I would sayfor the consulting world, if I was giving
students advice, it'd be do somethingfor a while and be really good at it.
That probably will lead to youhaving opportunities afterwards.
Would you say that?
Yeah.
I mean.
Yeah, I'd, I'd like to think I'dworked fairly hard at that job.
Screwed up a lot of things.
that was the biggest benefit I had.
being a good boss, he let me screwstuff up left, right, and center.
(07:37):
From day one, I have no idea whyhe permitted me to do that, but
it led me to have experiencesthat a lot of people don't have.
And that's not true of justme, like everybody at Teays.
That's how it was handled.
That's cool.
There's a general shortage, ofpeople with experience in this area.
Over the last 15 years, a lot of capitalhas been allocated to ag production
space and farmland in particular.
When you're trying to put hundredsof millions of dollars to work, you
(07:58):
know, and billions in aggregate andtrying to find people with that kind
of experience, like you're gonna havea shortage with that kind of growth.
It's been a pretty incredibleamount of allocations.
I think the challenge in workingwith students and knowing, I mean,
I've known Joe and I were in schooltogether, so we go back a long ways.
I don't think I've had a conversationwith Joe that he hasn't said.
Do you know anybody thatwould want to do this?
They're always looking for people thatare willing to work hard, that are smart.
(08:21):
Know about the ag sector.
Or know about investing andyou'll teach one or the other.
It seems like, it seems to, is sortof the sector in general, right?
Like people either come from investments,institutional investing side and learn
about agriculture or they come from theag sector and learn about investing side.
Yeah, I think that's right and it's veryhard to find folks that have experience,
(08:42):
in ag production, have an interestin staying in ag production, but also
really have an interest in finance.
Right?
'cause if they go to school andwant to be on Wall Street, that's
the direction they're gonna head.
I think there's a lot of people thatwant to go into ag production, but
they would love to talk to you aboutchemical rates or, weed emergence.
They don't wanna talk to you about balancesheets and present value and cash flows.
That's the issue we have as professorsoften with students when people are
(09:05):
really interested in ag sector andthey're like, oh, I'd love to work in ag.
And it's like, they would almost ratherbe a sprayer than be an accountant.
Two extremes.
Which I get right.
That can be a pretty satisfying job.
I assume you've also workedacross a variety of commodities
and a variety of locations.
Yeah.
I think there's a lot of times peopleinterested in agriculture are interested
in the commodity that they grew up.
(09:26):
Yeah.
My family grew up growing hogsand so I wanna work in hogs.
Right.
and it's like, whoa, there's this greatopportunity to do like, be like for
work at a wheat farm and like dakotasand they're like, I'm not doing that.
I'm staying here in mycounty doing this thing.
So touch on a little bit on the varietyof ag companies or subsets of the
ag sector that you've had to learnabout through the course of your job.
(09:47):
Every, I guess just to make a list, right?
Chip potato production, carrot, organicveg production, organic milk production,
seed corn, seed soybeans, and otherseed production, row crop commodity
businesses, both those integrated into,for example, the dairies where I used
to work, and also on its own, right.
You know, it's a standalone businessand different kinds of partnerships.
(10:10):
Today I'm involved with a pistachioranch, a coffee farm in Hawaii, hog
business, which to your point, I grewup on a hog farm and I never touched
hog until basically a year ago.
I was really excited to be part of it.
And that's an amazing partnership.
And then, continuing to look atadditional deals, whether it be, you
know, there's a lot of distress rightnow, particularly in California, both
because of water and labor, and generalcommodity prices for especially tree
(10:32):
nuts and grapes, both wine and table.
And so, looking at differentkinds of deals and opportunities
there for one of the clients.
The other thing that went likeas professors that we often
deal with is the students thatare not from the ag background.
Their exposure to agricultureis driving to campus.
Right.
And they're just like, yeah.
I'm just like, I don't, we just wannawork with like corn and soybeans forever.
I'm like, no.
There's a whole variety of things.
(10:53):
Yeah.
so here's a question for you.
Mm-hmm.
If you're looking for someone who wouldbe good in production ag, you've hired
people to do roles in these farms, right?
Yeah.
How worried are you about their specificproduction knowledge versus their
experience in some production system?
(11:15):
If you got a really sharp corn andsoybean kid from just north of town here.
Are you thinking, hey, if we need someoneto come into the coffee farm, there's
transferable skills or is it pretty,
I guess it depends on the jobthey're being asked to do.
For example, a guy that that worksfor a another chip potato company
(11:35):
that I don't have anything to do with.
He had virtually zero agbackground, but he was in the Army
and was used to managing people.
His role is managing a team of peopleacross a multi-state, production system.
That's his skillset that matters.
He kind of grew up on a farm.
He didn't go to business school.
He didn't go to college, buthe developed a real skillset
of managing people in the Army.
(11:55):
And that's translated really wellto him playing a very important role
with a very large, potato company.
That's cool.
For me, every time I go to Todd andsay, please find, you know what student.
I don't have any advice.
Like, hey, do you have anybody, I don'task for somebody who grew up in some major
production system, or, the son of some,
Joe has never said, getme a chip potato guy.
Yeah.
Find somebody with a brain with goodjudgment that works their ass off.
(12:16):
Mm
So, the other thing wedo is economic research.
We build models of the ag economy.
But the first thing we always want is whatdo you actually do in terms of your tasks?
What is a day at your job?
What are the tasks?
The tasks?
I spend a lot of time talking withthe managers of these companies.
Making sure they've got what theyneed, making sure they're on task,
(12:40):
accomplishing whatever initiativeshave been set out for them, giving
them the right kind of support.
Another important job, which anybodythat I work for, I'm sure doesn't like,
but its reality is kind of controllingthe chaos that comes from the ultimate,
interested parties in what's going on.
As you get further away fromdecisions that matter on, on those,
in those businesses, right, you'regonna get these shifts in the winds
(13:02):
that can cause major problems.
It's a job that I fail at continuously.
But you strive to.
keep the messages clear, make sure thatwe're all rowing the same direction.
Make sure we're all synced up.
Make sure that message is getting downto the team and not causing people
to go, what do these people want?
Or feel like, they're on anisland, rowing against the current.
And one of 'em literally is onan island, as you mentioned.
(13:22):
Can you give an example, like maybe evenhypothetical of what you mean by that?
I would say it's, it wouldbe like, imagine this.
So like there's aninstitutional group, right?
That has some ultimate decision makers.
It starts with allocations, right?
And then it goes to some subgroup that'sgonna make specific decisions and approve
or not approve of different deals andmoney that they're gonna allocate to it.
And they're gonna get tothose decisions today.
(13:43):
And then you're gonna get, youknow, a a, a sponsor that's gonna
give a commitment to, to go andput money to work in this area.
Two years later, somebody withinfluence changes their mind.
They read an article in the WallStreet Journal and decided this isn't
somewhere we should be invested in.
Well, that's not how production ag works.
These things take years anddecades, to build things of value.
That was always the philosophy ofTeays, to be, long-term focused.
(14:05):
you're trying to build theseunique businesses because of the
scale of capital available andthe ability to stay on that path.
That's not to say you just put theblinders on and don't adjust, but if
you adjust, it needs to be deliberate.
It can't be chaotic.
so that's not a very specific example,but that's kind of the crux of it, right?
So it would be like somebody allocatingthe capital tries some kind of new
(14:25):
apple and they're like, we're in apples.
We should switch to this variety'cause this is delicious.
And then they say Hey, we wanna switchall of our apples to this variety today.
That would be a very, like in the weedsexample where you're just like, ugh.
And you're like, oh man, we can'tjust get all new trees today.
We can't have thousands of theseapples for you by September.
How much of the role would beyou talking, in this case, the
(14:48):
hypothetical person who just had ahoney crisp apple for the first time?
Versus you being the farm manager's,just been told by somebody that they
need to replace all the trees and you'relike, hang on, just take a minute.
Let me go have a conversation.
How does that normally work?
I would say my time is like 6040 between talking, down toward
the businesses themselves andthe managers of those businesses.
(15:10):
And then 40% back up.
And that's communication flow back up.
Let's make sure everybodyknows what's going on.
Nobody gets surprised.
If some new idea comes, I don't want tobe a funnel, but like, hey, let's make
sure we talk about it before that makesits way down to chaos at the ground level.
Where there's some CEO of somebusiness who's got dozens or hundreds
of people working for him or her,and all of a sudden he's got some new
(15:31):
mandate and it's like, wait a minute.
Three weeks ago we were doing this and wecan't just turn this big shift, overnight.
Sounds like we could use Joesometimes at the University, to be
like, hey, here's what we're doing.
Right?
Yeah.
We need more those roles.
Probably everybody's listening.
Is that why it works reallywell for you to be a consultant?
Because you're not directly in the system.
(15:55):
It's been something that I'vepersonally enjoyed In these last
couple years because it allows meto say, Hey, I'm an outsider here.
I don't have a dog in the fight.
But I recommend you don't do this.
And I sleep better knowing thatif they still do X, at least I did
my best and it wasn't ultimatelyon me to make that decision.
But yeah, it's easy to losesleep over things that impact
people's lives and jobs.
Right?
Something that you don't, agree with.
(16:16):
It sucks if I can't make somethinghappen the way I wanted it to, but
there's plenty of times that I gotmy way and we did things I wanted
to and it was a dumb decision.
That's true as well.
I think farm, I'm gonnacall 'em farm folks.
Okay.
I like that.
I'm putting myself in that group.
We like to think, Wall Streetcould never possibly understand
the nuance of what we're doing.
Hmm.
(16:36):
Can you talk to that at all?
Do you think that these institutionalinvestors are a little more savvy than
people would like to give 'em credit for?
Understanding sort of theopportunity and the challenges of
being in production agriculture?
I doubt they're more savvythan they get credit for.
I'm using that very broadly.
There's an attitude I've run intoplenty of times of it's farming.
How hard can this be?
(16:56):
The reality is it's more complicated.
Most of these businesses aremore complicated than any
other type of manufacturer.
Like if you think aboutmanufacturing plant, right?
Like it's in a, it's all inside.
It's a controlled environment.
Manufacturing, like food manufacturing isan important part of these supply chains
But when you're ultimately residing on asupply chain that is subject to weather,
season, geography and logistics majormovement of serious volumes of product.
(17:18):
it's a whole nother animal.
And the amount of science that goesinto, growing even the most simple
like corn and soybeans, right?
It seems so simple.
You plant it, you combineit, you fertilize.
It's incredibly complicated.
And what goes into those chainsall the way through that system?
I think it's.
as complicated as it gets.
That brings to the next question,
That's a beautifulanswer for our audience.
(17:38):
which is, that we always think about.
So you have things that you're doing.
What are the constraints, what limitsor could potentially be limits for,
the ability for these businesses you'reworking with, to hit their objectives?
To be more general and to speakto where I would be involved, I
would say those constraints arealignment and agency problems.
Synced up decision making.
(17:59):
Those are the hard things to do.
Those are the more high levelthings to think about, but in
reality, a lot of businesses fail.
Even if they are in an area thatthey should have been successful.
A lot of times it has to do withpartners or management that just
aren't aligned with what they'retrying to get done, where you don't
have people all rowing the samedirection to achieve what they should.
Things start to break down.
(18:19):
if you've got a management team thatfeels like ownership doesn't have their
interest in mind, all of a sudden,they're not working To accomplish the
goals you wanna have accomplished.
In microeconomics we generally callthat principle agent problems, right?
And those come because ofasymmetries of information.
So like, somebody knows a bunch andsomebody doesn't know as much, or there
are things that are not observable, right?
(18:41):
If you're investing in a businessthat's somewhere else geographically,
you can't necessarily observe isthis person actually doing the
things that they're telling me?
Mm-hmm.
Right?
It's tricky for production agriculture.
You can do all of the right practicesand then something outside of your
control prevents you from realizingthat potential like weather or
a bunch of people quit on you.
That's often a problem in general, acrossthe economy, are these principal agent
(19:03):
problems with what is actually observable?
And then are there asymmetries in termsof objective functions or knowledge base.
And production ag, I think, is evenmore complicated in that way, right?
'Cause the feedbackloops are more difficult.
Information flow can be more difficult.
You're in the middle of nowhere, ona large potato farm, and the ultimate
owners, the ultimate economic interestin that deal aren't gonna see it
(19:26):
or touch it or feel it very often.
They don't really know what's going on.
let's say you have a bad year in ag, yougotta wait another year for feedback.
Was it really the weather?
Or do you not know what you're doing?
You get these questions anddecision making where, somebody
just throws in the towel.
And it's like, no, no, no, no.
You know, not yet I know itwas a bad year, but these guys
really know what they're doing.
And that's hard.
You gotta really trust people.
You gotta build systems where,folks are aligned to you.
(19:50):
Do you think, in January Iwent down to Florida and it
was the Aliko orange groves.
I've heard of it.
So they announced that theywere shutting 'em down.
They were gonna do some development.
It's crazy.
Like 50,000 acres of juice oranges,like big, you know, big deal.
And so we're driving in and I was ina bus with a bunch of farmers and it
was kind of the, overheard a coupleconversations where it's kinda like,
(20:12):
oh, this is a corporate run farm.
You can tell it by like theintentionality, like the
grasses in mow blah blah,
Mm-hmm.
Do you see that difference betweenfamily run where someone's pouring
their heart and soul into making sureeverything looks perfect versus these
corporate where an investor fromsomewhere else who's owning the operation?
Yeah, I would say all else equal.
(20:33):
If you took the best of the best, familyoperations and compared them to your
average institutionally owned operation,they're gonna run smoother, right?
When you've got that like leader that,or, or maybe a series of in a family
of, of leaders that, you know, there'sthat continuity That certainly matters.
I don't think it's crazy, theloyalty to, that family or
(20:53):
that individual they work for.
But institutional capital playsan important role as well.
For example, one of those familieshas been wildly successful and done
incredibly well, and now this business isso large that they have a huge problem.
How do I maintain that kind of wealth thatI've created for my family and not destroy
this incredible business that we'vebuilt and this legacy we wanna maintain?
(21:16):
You can find plenty of investorsthat'll show up and give you
a bid with zero promises.
Or they show up with, hey, we've got ourplaybook of how we chop these things up.
Or we bring efficiencies to thesebusinesses and they pay, you know, a
bunch of consultants to give 'em ideason what they should do and whatever else.
And, and that rarely goes well.
Continuity to the extent institutionalcapital can bring that solution in
(21:37):
those kinds of cases and maintainthis amazing business that's
already been built under that model.
I think that's why it's done that way.
So speaking of these institutionalmanaged farms, one of the things
when we, do extension events stuff,there's, there's a belief among a lot
of people that like there's be a worldin the future where that's basically
all there is with the ag sector.
What do you think about, do you thinkit'll continue to grow or have you seen a
(22:01):
steady state you mentioned before, laborin terms of qualified people that work
in the space is kind of binding, right?
That'd be one way to limit the growth.
That's just been kind of a symptomof this incredible growth over the
last, 15 years of institutionalmoney coming into the space.
Do I think farms using that term looselyare gonna continue to consolidate?
Yeah, I think there's a lot ofdrivers toward economies of scale
(22:24):
that aren't going away anytime soon.
Everybody wants to talk aboutAI these days and all these
things that it'll be able to do.
I don't know, I don't have an opinion, butit's hard for me to see how that reduces.
Or the extent it has any impact.
It seems to me that that's one additionaldriver of economies of scale, the ability
to manage larger and larger, platforms.
So yeah, it's hard for me tosee those drivers going away.
(22:44):
So do you think you will retire froman ag sector that's very different
than you started your career in?
Or do you think it'll be roughly similar?
If you had a crystal ball?
I would say roughly similar, butjust continue to consolidate.
Do you think that, there's been thesestories that Wall Street has a desire to
interact with production ag, find someway to gain exposure to production ag.
(23:07):
Do you think there's potential that someof these family farms could try to work
with institutional capital as partners?
do you think there's opportunity forthat, even like Midwestern farms?
Yeah.
I mean, it's difficult ona, corn bean sort of farm.
it doesn't have that kind ofsexiness that a lot of more
(23:29):
integrated type businesses can.
But, I think you see morevalue add approaches for a
lot of different companies.
it's hard for, your typicalfamily business, even a
large scale family business.
Like, let's make up a number.
So you had 25,000 acre cornand soybean farm in Indiana.
You know, that's difficult, right?
To have a real partner in thedecision making on that farm.
(23:49):
But I think a lot of 'em havebeen very successful courting,
land focused investment groups.
And leveraging that capitalto grow their operation.
Just like any business or any corn andbean business, that's leasing a higher
proportion of their land, there's risk tothat, like off balance sheet financing.
But can they leverage thosecapital relationships and, and
focus on farming and not have tobe plowing, as much dollars into
(24:13):
the land itself in order to grow.
I think there's been a lot ofthat that's gone on, with a lot of
success it works the other way too.
In my opinion, a lot of the mostsuccessful like farmland and you
know, focused funds, they've justidentified incredible operators and
they've said, we'll invest behind you.
Here's our parameters.
You're our guy in this region.
Let's go grow together.
(24:33):
Now you've got alignment.
Right?
These guys want
Specifically on land,
That's land in that
I think that's a modelthat's worked for a lot
I just think it's interesting'cause I think your point of some
of these are growing so large thatit does become really difficult.
Even from understanding,the finance part of it.
Like you've got a lot of exposure.
So being able to diversify ifsomebody else who's investing in the
business would be sweet but thank you.
(24:54):
But yeah.
in that 25,000 acre, corn and soybeanfarmer, like back to constraints and
what you're solving for, like managingpeople and the equipment fleet and
logistics of that kind of operation.
I don't know that there's a need for acapital investor it's not that kind of
scale where that's logical and you don'twanna muddy up that decision making.
When you get into more integratedbusinesses that need to spend 50,
(25:15):
a hundred million dollars on somemajor plant and expansion those
become major capital problemsthat you're trying to solve.
For your corn and bean farmer in Indiana,the capital need is the land, ownership.
I think that's the constraint.
Other businesses that are moreintegrated have bigger capital
needs through that chain.
I think, you know, then there'slogic in those kind of partners.
(25:36):
Because if you're gonna find somebodythat's gonna write those kind of
checks, they wanna say and what'shappening to, to their money.
They don't want a lease, likefarmland, you can find alignment there.
So, so it sounds like there's, uh,the, what I would say, it sounds like
the, the areas that are most ripe forcontinued maturation or growth in these
kind of spaces would be things thatwould be not just a commodity producer.
(25:57):
Not something where you just takeit to the elevator and sell it.
But would be things that you're gonnawanna see through the supply chain
either directly to the consumer in afood product or maybe in a industrial
product or something, but something thatyou are producing that's a little bit
more specialized that has that sort ofsupply chain interactions throughout.
Yeah.
Especially when you go so far thatthose supply chains touch customers
(26:21):
that need long-term security inan inherently risky business.
As soon as there's that pull from theother end of that system for consistency.
For certainty through time.
I think that becomes a major driverof the need for that capital and
the need for that permanence inthose sorts of relationships.
I was gonna sell french fries globally,I'd want to get all the way down to
(26:43):
the potatoes in the ground figuredout from that company's perspective.
Yeah.
In the case of, fry potatoes.
Most of that's still done, the levelof integration there is like grower
agreements, the same with FritoLayand other chip potato companies.
They're still solving for that.
I might get a call from a customerthat says, hey, over the next three
years I need you to be doing 5,000acres in this region because I have
(27:07):
a couple of retiring producers.
And need replacement.
And it's been great working with you.
When you have that kind of pull froma customer, the checks that need
to be written to go out and executeon that, get bigger and bigger.
So you're buying tickets on afull plane, essentially, right?
Yeah.
Trying to buy a seat on a planethat is already booked up.
When you're thinking about a productionbusiness, a lot of times with farm
management, we talk about benchmarks and Ithink the benchmark discussion is around,
(27:31):
did I pay more for seed than my neighbor?
What you are talking about is a level ofwhat's the return to these businesses,
regardless of if it's a dairy farm,a carrot farm, a potato farm, we're
literally evaluating these businesseson the potential to money, not how are
they relative to other potato farms.
(27:52):
Mm-hmm.
Well, ultimately you'recompeting with your neighbors
using that term pretty broadly.
Those key indicators,KPIs, certainly matter.
If you're in a corn and bean business,like what's your cost production, right?
That's what matters over the long term.
And it's not just against yourimmediate neighbor, it's against
whoever you're competing with globally.
Can you compete, can you make money atthis kind of long-term price of corn?
(28:16):
For livestock businesses, nowyou're talking about, how many
pigs you're weaning per, year.
How many pounds of milk percow, per day or per year.
And what kind of cost does it takefor you to maintain that herd?
What are your parameters arounddisease incidents and how's that
impacting your production through time?
These investment managers thatyou interact with, they're closer
(28:38):
to what Chad is saying, right?
Which is sort of saying, look, we wantto hit this sort of return target, and
I don't care if it's carrots or cows.
I want that return target.
Yeah.
It, it certainly starts with their goals.
They're gonna start buying, almondfarms, or they're gonna go Greenfield,
you know, new, new almond ranches.
They have some expectation in mind,but ultimately they're gonna be
(28:59):
looking at how is this farm doingrelative to its neighbors, these
benchmarking approaches to try tosay, are these the right guys or not?
Maybe I was, brilliant that now'sthe time, let's go buy a bunch
of land and develop almonds.
'Cause you know, we're at the lowestsome cycle or whatever the idea is.
But then if you signed up with, whoever'srunning that for you, whether that's
an outside, farm manager, whether it'syour own team that you're building.
(29:21):
If they're not performing well, then yougot halfway there, but now you're flailing
'cause you don't have the right team.
Okay.
How much of it is driven by theserelationships when you have an
established farm, there's a customerwho's working with you, and they're
like, you've made our life a lot easier.
Can you make our life even easierby growing another 5,000 acres?
Like how, frequently do yousee that kind of thing happen?
(29:46):
Yeah, a fair bit, especiallyin pretty consolidated, areas.
Chip potatoes is an easy oneto pick on 'cause it is so
consolidated at the customer level.
FritoLay is the biggest player by far.
When they need to solve a problem,it's always a big problem.
When you're doing things at that scale.
You've seen it with their supply base,like consolidation, consolidation.
It can go too far.
They can get uncomfortable withtoo much exposure to one grower.
(30:08):
But when they have those relationshipsand they have that trust and there's kind
of this history of execution, you know?
It wouldn't be surprising that they losesome grower in some part of the country.
In a company like FritoLay,they're so spread out, right?
The logistics of chip potatoesthose plants are everywhere.
They're produced closeto population centers.
They need potatoes grown close tothose plants and population centers.
Unlike the fry potato business,that's pretty concentrated in the
(30:30):
Northwest, here in the States.
Frito calls and says, Hey, I need 2000acres in the southeast, they're not just,
putting out a request for proposals.
They're going to those suppliersand saying, can you help me?
Can you help me?
It's a ton of risk.
A ton of work.
Ton of just logistics and everythingon top of it to try to execute on that.
I never thought about how much our potatochip system is similar to electricity.
(30:54):
Right, it's like the electric grid.
You can produce all theelectricity you want in Manitoba.
But if there aren'tpeople there to use it.
I dunno, it's fascinating.
Now, I'm gonna my daythinking about chips all day.
So I teach this farm management class.
And I think I've struggled a littlebit on communicating why we have a
specifically farm management classas opposed to business management.
(31:21):
You seem to have some insights into why wewould have a farm management class versus
a general business management class.
So I'm asking you can you help me?
I would go back to, I mean, I'mbiased, number one, to agree with
you, like, yeah, of course farmmanagement is special and different
than general business management.
But yeah, I think it relies there's such abreadth required to run a successful farm.
(31:44):
You've got to understand aton of scientific principles.
You've got to deal with allsorts of suppliers and vendors
to support that business.
You've got to understandincredible complexity to truly
understand your cost of production.
Depending on what kind of businessyou're in, you know, you've gotta
deal with customer relationships.
That can be everything from yourintegrated contract environment to
(32:05):
an open commodity sale process, andyou've gotta be able to manage that.
I mean, there's classes here atPurdue, at least there used to be
about just marketing commodities.
There's a whole lot of businesses thatyou could be managing, If you're out,
managing the local Home Depot, you don'tneed to understand anything about hedging.
You don't need to understand longand short contracts or long and short
puts, In addition, you've got allof the government policy influence
(32:26):
in farms and that's incrediblycomplex and difficult to navigate.
That has to be managed, right?
And you have to play that gamein order to be successful.
Whether it be insurance products, paymentsystems or NRCS, related conservation
programs, it's really complex.
Well, and then we have the otherside of that too, which is all of the
ways that you face regulation, right?
mm-hmm.
(32:46):
Yeah, yeah.
Things coming onto your farms,things going off of your farm,
how people and things aretreated when they're on the farm.
It's incredibly complex.
So Chad, this is why we wantyou to keep teaching that class.
Yeah.
That's a good answer.
Thank you.
Yeah.
Are we close to the wrap up point?
I think we are.
As the longtime listeners to allof the many, many episodes we've
(33:07):
recorded at this point know I towrap it up with a lightning round.
So this is for the people on thetreadmill, given that last push to get
through, or the people out working andthey're just like, I'm falling asleep.
I wanna really, so the key iswith the lightning round as these
are, you have to answer quickly.
The first one I'll ask you is, if youhad a magic wand that you could only
(33:27):
use for work to be able to observesomething you can't currently observe,
what would you do with that magic wand?
What would you want to be able to see?
I suppose I would, I would wanna seewhat the folks on the ground actually
think, like, have full transparencyhow they really feel about the
relationships with, owners or thepartnerships they're interacting with.
(33:50):
Because you spend so much of your time,you spend a ton of time dedicated to
people to really understand, they'regonna tell you what you want to
hear sometimes, and I'd rather hearthe stuff they're really thinking
that maybe isn't as pleasant.
Okay.
The last time that you've had troublesleeping because you were preoccupied
about something you're thinking aboutwith work, what were you thinking about?
(34:10):
You don't have to get too specific.
It would've been fairly recently, afew months ago, it would've been about
a business with some struggles thatwere kind of a sudden, realization and,
frustration to not have seen it sooner.
Caught off guard.
Irritation at myself for not having madeharder decisions sooner, which may have,
avoided some exacerbation of the issues.
(34:30):
If I lose sleep, it's usually becauseit becomes clear that some decision that
should have been made that maybe beenthinking about for a while and like all
of a sudden it led to a bigger problem.
Okay.
If you were issued at work a timemachine you could only use for
professional purposes, when would you go?
When would I go?
(34:52):
Am I like staying therepermanently when I go there?
No.
You're just gonna govisit that time period.
It's a time machine.
It works both ways.
Can I go back to myselfand give myself advice?
You can do whatever you want.
That's what I would, youhave to use it for work.
You can't be like, I'm gonnago see, Guns N Roses, 1987.
You have to use it for work.
I would go back to the day I leftPurdue and went to my first job
(35:12):
and I just have a list of advice.
Do this, do this.
You know, that was dumb.
those kinds of things.
Yeah.
I'd have a long list.
I also feel like you kind of putJoe in a box because you said
you can't go back to Guns N Rosesconcert, but should he be related to
If a work related reason,
If you can write that off, ifyou can get it through corporate,
(35:33):
Well, there's people who do.
Yeah.
No, I know.
You have to
I just felt bad 'cause I felt likeTodd kind of put you in a box.
If you did want to go
He gave me a time machineand then he restricted me.
Exactly.
It's a work issue time machine.
This is like,
You've left out an entire group of peoplerelated to Guns N Roses as an industry.
For Joe, that's not Joe's industry.
But I don't want to take that away from
If Izzy Stradlin wants to come on thepod, talk about Izzy Stradlin does,
(35:56):
then he can it to go back to old Guns
To be clear, I don't wantto go to an old Guns N Roses
Okay.
I didn't think Joe I just thought, no.
Is it weird that was the first
I was concerned that the listenersmaybe thought we took that away.
Yeah, I should have said something smartlike the signing of the Declaration
of Independence or something, right?
But no, Guns and Roseswas the first thing.
Anyway, feel like we'vecovered the ag economy.
(36:17):
Thank you for listening.
Make sure to join us for futureconversations where we learn about the
ag economy, Guns N Roses, chip potatoes,
Fried potatoes.
What else have we covered here?
I think we can, we can wrap it up there.
Uh, so thank you for joining us.
If you think we could learn fromyou and you happen to be coming
through Purdue, let us know.
Uh, 'cause we would love to learn more.
(36:39):
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